Save money at tax time? Yes you can do it and you should do it! As Canadians, we have nice tax breaks that can reduce our tax bill and save us some money! But you have to hurry up: the following year-end tax tips must be used before December 31st!
5 year-end tax tips that will save money!
As much as I am proud to pay taxes, I don’t like leaving money on the table! Who does anyways! So each December, I set up my tax straegy so I can optimize my tax return! My tax return is either used to pay for exatracurricular activities for kids or pay for our family vacations! A better strategy would be to use it to pay any debt you have or contribute to RESP.
Tip 1: Pay all your child care fees before December 31
If your child attends a daycare, chances are you will get a bill every month! Since child care fees are deducted from your taxable income, make sure to pay them before December 31st!
Tip 2: Give to charities and claim your receipt
Tis the season of giving to charity! So why don’t you give back and save money at the same time? For $100 donation, you can get a 15% tax credit from the federal government! If you are a first time donor, you can get up to 25% tax credit (up to $1,000). See details here!
Tip 3: Pay all your medical bills!
Do you have a toothache? Are you planning for a root cana? A special exam? Plan it before December 3st and pay for it before December 31st. I always plan all my dentist appointments around December so I can claim tax breaks! To be able to claim the medical expense tax break and save money, you will need to spend over $2,109! If you have family of four wearing glasses (like we do), and a family with dental problems (like me) and you pay a medical insurance, you will be able to claim that credit and save money!
For details on how to calculate it, check here
Tip 4: Pay for fitness activities
You can claim up to $500 for fees paid during the fiscal year! You will get a return of 16% (which means $80). It’s not huge money but it adds up to your overall tax return! If you are planning to sign up your child in a fitness activity in January: (swimming lessons, indoor soccer), why don’t you do it during the month of December, pay for it and claim your tax credit and have more money in your pocket
Tip 5: Optimize your rental income
If you happen to have a rental income, make sure to optimize it before December 3st! Pay all the repairs needed, buy all the needed material for the renovations, pay the snow removing company, etc! Don’t delay the payment until January, make sure to do it before December 3st to be able to save money and optimize your tax return
The above 5 tax tips will reduce your taxable income and will save money down the road! Do you have any other tax tips to share with us?